Reply #1: Indulgence? We were blackmailed.

[Laelth]

We had to have AIG's participation in the bailout. Both American political parties knew it, and both parties have taken steps to insure it.

AIG and bank executives said they would not participate in the bailout if their bonuses were capped. They blackmailed us. The Federal Government can't let these banks (nor AIG which insured the credit default swaps) fail, because if it did, foreign banks would lose confidence in the U.S. and would not loan the government the $1.5 trillion it needs to keep the government running. Foreign banks finance the U.S. national debt, and AIG insures those banks against losses. AIG held a gun to our head and said, effectively, give us our bonuses or the whole Federal Government collapses because no bank will be willing to lend the U.S. money.

So, Treasury insisted that the bonuses be allowed, and the restriction against them (that Dodd had insisted upon) was removed. Here, Obama did what he felt was best, and I am hesitant to second-guess him on this.

That's what I think happened.

:dem:

-Laelth

cross-posted--six times now.